A law firm that specialised in financial mis-selling claims that was operating with net liabilities of £15m has gone into administration, weeks after a winding up petition from the tax authorities.

Quanta Law Limited, which also traded as Quanta Claims, has closed after joint administrators were appointed at the start of last week.

The affairs, business and property of the company are being managed by the joint administrators from insolvency firm Begbies Traynor.

A petition to wind up Quanta Law Limited was issued in April by HM Revenue & Customs, with the hearing scheduled for this month. Administrators were appointed two days before the hearing date was due.

Quanta Law, based in the north-west, had been authorised by the Solicitors Regulation Authority as an alternative business structure since 2018. It specialised in financial redress and mis-selling and operated on a no win, no fee basis, taking a cut of 25% plus VAT from any compensation secured. The firm’s Linkedin page states that its clients included high-net-worth individuals requiring advice in complex business disputes, as well as those making claims for mortgage mis-selling and mis-sold investments.

The most recent accounts, covering the year to 31 December 2021, show net liabilities of almost £15m. The figure had more than doubled in a year. Meanwhile the firm owed almost £50m and was owed around £37m. The company made a loss of more than £10m in 2021

In the notes to the accounts, the director said that ‘certain material uncertainties’ could cause doubt to the company’s ability to continue as a going concern.

The notes said: ‘The shareholders and directors of Quanta Law acknowledge issues around cashflow have arisen due to delays to settlement of cases caused by the legal system slowing down during the pandemic, reviews of case files by [the financial ombudsman] and a general reluctance by banks to acknowledge customers’ concerns regarding overcharging and mis-sale of their mortgage products.

‘These factors have delayed the settlement of files and have had a negative impact on cashflow within the business.’

Quanta said it had diversified into other areas with a shorter timespan to settlement and cut costs by moving to smaller offices. Staff numbers were cut from 73 to 47 and talks were ongoing with HMRC to reclaim £1.9m of VAT. A ‘significant’ number of cases had been taken over by another unnamed firm to further reduce the debt burden on Quanta.

 

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